I hear veterinarians level the claim of “unfair” competition again and again- and again. I’m starting to feel like Inigo Montoya in The Princess Bride. “You keep using that word. I do not think it means what you think it means.”
The Reading Eagle Business Weekly section recently featured an article (9-24-13, “Veterinarians have their hands full”) about how competition is bringing “change to pet docs”. I read it with interest for two reasons. First, as a CEO of an organization providing veterinary services, I know a little bit about the market. Second, I wanted to see how long it would take a veterinarian to level the claim of “unfair” competition against non-profit veterinary providers. I got a two-fer when I saw that it wasn’t just non-profits generally which were vilified, the Humane Society of Berks County was specifically named as offering “unfair” competition. Better yet, we didn’t even get a chance to respond to the false claim in the article. I guess if a vet says it, it must be true.
Are non-profit veterinary practices competition? You bet! As in every industry, veterinary medicine is competitive. What makes it a little unique is the effectiveness with which private practice veterinarians have functioned as a cartel and blocked competition by any other model than their own, decades old and faltering, model of the independent practice model. They say the mere fact we are a non-profit corporation instead of an llc. or plc. corporation is inherently unfair and act as if it’s unseemly and unheard of. One need only look around to see how wrong they are.
People like to refer to their pets as kids, so let’s look at child care. There are for-profit and non-profit providers for daycare fighting it out in the market place. Veterinary medicine is medical service for animals, so let’s look at human health care. There are for-profit and non-profit hospitals, insurance companies, and doctor’s offices and practices.
Across all sectors of our economy there are a variety of corporate and business entities providing service from sole proprietorships to limited liability corporations to professional corporations to publicly traded companies to government entities. Does Exeter McDonalds complain about the municipally owned Reading Country Club horning in on its burger business right across the street? Is it competition? Yes. Is it “unfair” competition? No.
Even within the vet industry, there have been complaints about for profit competition. Banfield, owned by the Mars candy company, operates out of PetSmart. VCA is a publicly traded company. Vets complain about them, too. VCA can use its billion dollar plus annual billing to obtain better pricing on its drugs and supplies than the local one owner vet practice can. They can use their Antech diagnostics division to give themselves preferential pricing and use the resources of that company to fund the purchase of additional practices. They have a wall of lawyers who help them get around the laws in states where private practice vets have managed to block corporations like VCA from buying practices directly- instead they run complex professional management services for their own practices. They have a single marketing department. Is this completion? Hell, yes! Is it “unfair” competition? I don’t think so but I’m sure our little HSBC vet practice offer far less competition of any sort to our competitors. After all, there are three VCA’s in spitting distance of our practice.
On an aside, I wonder why VCA didn’t get mentioned specifically by that vet in the article? Perhaps because he sold his own prior local practice to Los Angeles based VCA years ago?
What exactly is our non-profit advantage, by the way? We pay payroll tax, like the vets. We have all the same facilities and operations and staff and carrying capacity costs as the vets. We don’t pay tax on our stuff, but neither do the vets since they are tax exempt for all business related purchases, just like us. Most vets draw a salary so they pay income tax, not corporate tax, and so do we. Non-profits don’t pay property tax, but if we lease a building we still have that cost passed along, just like a vet, and let’s be honest, trash and sharps collection cost a practice as much as most property tax bills. In short, our base costs are essentially identical to a for-profit vet practice.
So, what would be “unfair” competition? What would be unfair would be if we were able to find a way to use whatever paltry tax benefit we get and use it to unfairly undercut other vets in pricing. That would be unfair. But we don’t. We peg our rate to the middle of the market, meaning that at least half the private practice vets in town charge less that we do and less than the other half of the vets in town, which charge more than we do. Are they “unfair” because the charge less than we do?
Perhaps the vets think we have some unfair heart tugging capacity that brings in clients. I sure hope so. Because we need every single one to help us recoup the costs for the hundreds of thousands of dollars in free and reduced cost services we provide to stray and homeless pets in our care and to the thousands of low income clients we assist each year because they have no place else to turn. Certainly not to the private practice vet who often asks for a credit card in advance of service. Is that fair to us? Yes, it is, because we chose to help those people. It’s our mission, which is why it’s not only fair, it’s legal. Just ask the University of Pennsylvania Ryan Veterinary Hospital, which is a non-profit hospital that somehow avoid mention by the vets. Veterinary services help animals stay healthy and stay in homes. And stay out of shelters. Period.
The reality is any private practice owner could become a non-profit corporation any time then choose to take advantage of the same so called “breaks” we get. But most don’t because they know it’s not some silver bullet which will help them save their practices from the economic march of time. The same march that crushed the family doctor under foot. Or the Sony Walkman. Or the haberdasher. Fair? Yes.
To the private practice vets who feel the strain of the economy: I feel your pain and I have sympathy for you, but your pain and my sympathy can’t change what’s coming. It isn’t HSBC or UPenn Vet or Atlanta Humane or San Francisco SPCA causing you this pain or is bringing an end to your storied monopoly of services. To end on another quote, this time by Joe Strummer, “It’s just the beat of time, the beat that must on. You who have been crying for years- we’ve already heard your song.”
We’re here. We’re non-profit. Get used to it.